Text of PM’s Speech at Economic Times Global Business Summit

I am very happy to be here today. The global economy is going through a period
of uncertainty. At a time like this I am glad that so many participants not
only from India, but also from abroad have taken the time to come here. I am
sure all of us in India will benefit from the experience of other countries. I
will take this opportunity to present to you some of my thoughts on the
progress of the Indian economy and on the business environment.

Some of you may recall what I have said before - that true reforms are those
which result in transformation in the lives of citizens. As I have said before,
my goal is “reform to transform”. Let me start with the basics. What should be
the basic guiding principles of economic policy in any country, particularly
for the developing countries?

Firstly, we have to improve the use of our natural and human resources, to
increase the value addition we can get from them. This means increasing the
efficiency in allocation of resources. It means greater managerial efficiency. It
means removing unnecessary controls and distortions.

Secondly, we should create new opportunities for citizens to progress and also
give them a choice of opportunities. Opportunity is like oxygen to the
aspirational citizen and we are keen that this is never in short supply. In
simple terms, it means Sabka Saath, Sabka Vikas.

Thirdly, we have to increase the quality of life of the common citizen and even
more so, the quality of life of the poor. Quality of life may have an economic
aspect, but it is not economics alone. If a government is progressive, and runs
an honest and efficient administration, the biggest beneficiaries are the poor.
I know from my experience, that poor governance hurts the poor more than it
hurts others. Therefore, improved governance is as important as economic
reform.

We live in a globally connected world. Actions of one country affect another.
Such actions are not only based on trade and investment but also in matters of
pollution and environment. A poet had said that no man is an island. Today it
can be said that no country can live alone. It is often said that all politics
is local. To me, all economics is global. Indeed the distinction between
domestic affairs and foreign affairs is increasingly losing relevance. For a country
in the modern day, it is not sufficient that its economic policies should only
address its domestic priorities. To me, India’s policies must be such that they
make a positive contribution to the rest of the world.

Many of you are aware of the contribution India can make to the global economy
at a time of economic stagnation in many parts. For the last four quarters,
India has been the fastest growing large economy in the world. In 2014-15,
India contributed 7.4% of global GDP in purchasing power terms. But it
contributed 12.5% of global growth. Thus its contribution to growth is 68%
higher than its share of the global economy. FDI in India has increased by 39%
in the last 18 months, at a time when global FDI has fallen.

But a country’s contribution goes beyond economics. Protecting our planet from
climate change is one of the most important tasks for this generation. If one
country reduces its environmental footprint, it creates benefits for all
others. It is for this reason that in the COP 21 Summit, India made far
reaching commitments towards the larger welfare of the planet. In history,
every country that has grown has increased its per capita emissions footprint.
We are committed to re-writing that history. We are committed to reducing the
emission intensity of our GDP by 33% by 2030 even while growing at a fast pace.
For a country which is already at a very low base of per capita emission, this
is a very ambitious target. We have committed that by 2030, 40% of our electric
power capacity will be from non-fossil fuel. We have also committed to building
an additional carbon sink of over 2.5 billion tonnes of carbon dioxide
equivalent. This will be done by creating additional forest cover by 2030. This
commitment is from a country with a very low per capita land availability. We
have taken the lead in launching an international solar alliance, involving 121
countries falling between the Tropic of Cancer and the Tropic of Capricorn.
This initiative will help many developing countries, from Africa to South
America, to take advantage of developments in renewable energy around the
world.

Let me now return to the three policy objectives I mentioned. I will start with
the performance of Indian economy. Economists talk about GDP growth, inflation,
investment, and the fiscal deficit as key economic parameters. Since this
Government took office, growth has increased and inflation has decreased.
Foreign investment has increased and the fiscal deficit has decreased. And
despite a slow-down in global trade, the balance of payments deficit has also
decreased.

Yet, such broad statistics give only a partial picture of what we are
attempting, and what we are achieving. It is often said “the devil is in the
detail”. But I believe that God is in the proper execution of many so-called
details. It is these so-called details which, when done well, add up to a big
picture.

You may be interested to know that • India’s highest ever urea fertiliser
production was achieved in 2015.

When I give these figures, it is important to remember that in the preceding
years, many of these indicators were moving in the opposite direction. Not only
have many indicators improved, but they have improved by large margins. For
example, in 2013-14, the total number of National Highway kilometres awarded
was about 3500. This more than doubled in the first year of this Government to
nearly 8000 kilometres, an all-time high. This year we are planning to award
10,000 kilometres.

Let me give you more examples of quantum leaps. The Shipping Corporation of
India which made a loss of Rs. 275 crores in 2013-14 made a profit of Rs. 201
crores in 2014-15. This is a turnaround of Rs. 575 crores in one single year.

In 2013-14, India accounted for just 0.1% of global demand for energy efficient
LED lighting. In 2015-16, it is 12%. Indian LED bulbs are now the cheapest and
most competitive in the world, costing less than a dollar versus a global
average of 3 dollars. In 2013-14, India commissioned 947 megawatts of solar
power plants. In 2015-16, this will rise to over 2500 megawatts. It is expected
to reach 12,000 megawatts in 2016-17. India’s share of the global solar energy
market will rise from 2.5% in 2014 to 18% in 2016. India’s contribution here is
not merely in increasing the share of clean energy. Its other contribution is
that the huge increase in scale has enabled producers to cut prices benefitting
the whole world. In 2013-14, 16,800 kilometres of transmission lines were
added. In 2014-15 this rose to over 22,000, an increase of 32%. In the power
sector as a whole, the cost of power has declined by over 30%.

Let me turn to the second aspect — improving opportunities. I believe in the
politics of empowerment. I believe in empowering the people to improve their
own lives. We undertook the world’s largest and most successful financial
inclusion programme. It has brought over two hundred million unbanked people
into the banking system. In the early days of this programme, sceptics felt
that these accounts would have no balances. You will be surprised to know that
today these accounts have a balance exceeding Rs. thirty thousand crores or
over four billion dollars. We have also issued a record number of debit cards
to them. India is now one of the few countries where the market share of an
indigenous credit card brand exceeds 33%.

We have introduced a new and comprehensive program of crop insurance. This
empowers farmers to give their best, with the State providing cover against
risks beyond the farmer’s control.

We have introduced soil health cards to empower our farmers. The card will tell
every farmer the exact character of his soil. This will enable him to increase
crop yield, reduce over-use of chemical inputs and fertilizer and restore soil
health.

Entrepreneurship is one of India's traditional strengths. It was sad to see it
neglected in the last few years. “Business” and “profits” had become bad words.
We have changed that. We need to value enterprise and hard work, not wealth.
Our programs ranging from MUDRA to Start Up India and Stand-Up India provide
opportunity to the hard working and to the enterprising. In so doing, we have
placed special emphasis on Scheduled Castes, Scheduled Tribes, Other Backward
Classes and women. We are empowering them to become masters of their own
destinies.

Creating opportunities for cities and towns to grow is very crucial. Urban
areas are an engine of growth. A key initiative for urban transformation is the
Smart City Mission. The Mission has several ‘firsts’. It is the first time that
certain areas in cities will be comprehensively developed in a systematic and
qualitative way. These areas will act as ‘light houses’ which will eventually
influence the rest of the city. It is the first time that there has been such
extensive citizen consultation. Nearly 2.5 million people participated through
contests, discussions, polls, blogs and talks on the MyGov platform. This is a
major break from the top-down approach to urban planning. It is the first time
that allocation of funds in a government scheme is done not by decisions of
Ministers or officers but on the basis of competition. This is a good example
of competitive and cooperative federalism.

As I mentioned earlier, the role of a Government does not end with the economy
alone. There are many non-economic dimensions which are vital for ensuring the
welfare of the citizens. Good governance is crucial. We have taken numerous
steps which have transformative potential. We have ended the era of high level
corruption. This is a fact acknowledged by Indians and foreigners, and by
critics and supporters of this Government. This is not an easy achievement. We
have ended political interference and crony capitalism in nationalized banks.
We have for the first time appointed several heads of public sector banks from
the private sector. Transparent auctions have cleaned up the natural resources
sector which was riddled with scandals.

Many experts have commented on the need to reduce subsidies. The new universal
access to banking through the Jan Dhan Yojana, has enabled plugging of huge
leakages in subsidies. In developing countries, fuel subsidies are generally
very difficult to tackle. We have successfully decontrolled cooking gas prices.
We are now operating the world’s largest direct benefit transfer scheme for
cooking gas. Subsidies are transferred to the bank account of households.
Through electronic verification, multiple and bogus connections are eliminated.
This enables genuine beneficiaries to get what they deserve while eliminating
those who are not eligible. This has substantially reduced the subsidy.

Another subsidized fuel is kerosene, used by the poor for cooking and lighting,
and distributed by state governments. There is clear evidence that a large
quantity of subsidized kerosene is misused and diverted. We have begun a pilot
in thirty three districts where kerosene will be sold at market prices. The
difference between market price and the subsidized price will be transferred
directly to bank accounts of those who are poor. The poor will be properly
identified through bank accounts and biometric identification through Aadhaar.
This will eliminate duplicate, non-eligible and bogus consumers. This
elimination will reduce the total subsidy. We have decided that 75% of the
savings from this will be passed on to the states. Thereby, we have encouraged
state governments to implement this in all districts.

The experience of Chandigarh, shows that this is possible. In April 2014, there
were 68,000 beneficiaries of subsidized kerosene in Chandigarh. A campaign was
launched to issue gas connections to all eligible families. 10,500 new gas connections
were issued. Kerosene quotas were stopped for 42,000 families who already had
gas connections. By 31st March, 2016, Chandigarh will be declared
kerosene-free. Believe it or not, till date, the saving achieved in kerosene
consumption through this initiative is 73%!

Two days ago at a meeting with Chief Secretaries of the States, I was reviewing
implementation of various pension schemes. I was pleasantly surprised to see
that there had been noteworthy reduction in leakage, simply by eliminating
those who were double counted and who were ineligible. In some states, a
reduction of 12% in subsidies has been achieved without any harm to the poor.

Another major subsidy is on fertilizer. A substantial quantity of subsidized
urea is diverted illegally to use in the production of chemicals. We have
introduced a simple but effective technical solution: neem-coating of urea. The
organic neem coating makes the fertilizer unsuitable for diversion. We have now
achieved 100% neem coating in both domestic and imported urea. A significant
side benefit has also happened. The collection of neem leaves for urea has
become a new income earning opportunity for rural women.

I know that several of you are economists. Economists generally believe that
human beings are rational. They believe people will not give up a benefit for
which they are entitled. Last year, I gave a call to citizens. I asked them to
give up their cooking gas subsidies, if they felt they were not poor enough to
get it. We also made a promise. Every connection given up, would be used to
give a new gas connection to a poor family. Poor women in rural India use
firewood or biomass and suffer greatly because of smoke. This scheme is
entirely voluntary. You may be surprised to learn that nearly 6.5 million people
in India have responded to my call. It warms my heart, to see that so many of
them have come forward, with no compulsion to benefit the poor and give up
their subsidies. Already, over 5 million new connections have been given to the
poor. It is a sign of the public spirit and the self-respect which prevails
among Indians and shows the potential of citizen action. Another example where
citizens have responded is in the case of Khadi. In October 2014, I had
appealed to all Indians to buy at least one Khadi garment. In response, Khadi
sales have increased substantially.

We have taken a creative approach to tackling the problem of loss making power
distribution companies. Under the UDAY programme, short term debt relief is
given by state governments taking over bank loans. But this is accompanied by
strong long term conditions to hold both the distribution companies and the
states. This will create the conditions for rolling out 24x7 power supply.

Our country suffers from an excess of old and unnecessary laws which obstruct
people and businesses. We began the exercise of identifying unnecessary laws
and repealing them. 1,827 Central laws have been identified for repeal. Out of
these, 125 have already been repealed. Bills for repealing another 758 have been
passed by the Lok Sabha and are awaiting the approval of the Upper House.

I have given just a few examples of the potential of improved governance. The
benefits of improved governance and reduced corruption are lasting and
profound. If our policies are studied closely, you will find that many are
popular, but none are populist. Every one of the changes we have made is in the
direction of good governance and rationality.

I have been referring to cooking gas, fertilizer and kerosene subsidies. I must
confess that I am surprised by the way words are used by experts on this
matter. When a benefit is given to farmers or to the poor, experts and
government officers normally call it a subsidy. However, I find that if a
benefit is given to industry or commerce, it is usually called an “incentive”
or a “subvention”. We must ask ourselves whether this difference in language
also reflects a difference in our attitude? Why is it that subsidies going to
the well-off are portrayed in a positive manner? Let me give you an example.
The total revenue loss from incentives to corporate tax payers was over Rs.
62,000 crores. Dividends and long term capital gains on shares traded in stock
exchanges are totally exempt from income tax even though it is not the poor who
earn them. Since it is exempt, it is not even counted in the Rs. 62,000 crores.
Double Taxation avoidance treaties have in some cases resulted in double
non-taxation. This also is not counted in the Rs. 62,000 crores. Yet these are
rarely referred to by those who seek reduction of subsidies. Perhaps these are
seen as incentives for investment. I wonder whether, if the fertiliser subsidy
is re-named as “incentive for agricultural production”, some experts will view
it differently.

I am not arguing that all subsidies are good. My point is that there cannot be
any ideological position on such matters. We have to be pragmatic. We have to
eliminate bad subsidies, whether or not they are called subsidies. But some
subsidies may be necessary to protect the poor and the needy and give them a
fair chance to succeed. Hence my aim is not to eliminate subsidies but to
rationalize and target them.

In 19 months, much has been achieved. Much more is expected of us. And there
are challenges ahead. Yet, I am now confident • that we can successfully go
forward, • that we can successfully go faster, • and that we can do so in a way
that will benefit the common people.

When the people of a nation make up their minds to go forward and when the
power of the people is with us, hard challenges become huge opportunities. This
confidence of mine is not formed in a vacuum, but founded on my experience over
the last 19 months.

We inherited a struggling economy, just recovering from a currency crisis. In
less than two years, we have taken India to the top of global league tables of
foreign investment and growth. Friends, we have a long way to go but I feel
ours is a journey well begun. Like all long journeys, there may be obstacles on
the way, but I am confident we will reach our destination. We have created a
platform for a new future and for a new India:

An India where every child is born safely and maternal and infant mortality are
below world averages,

An India where no person is houseless,

An India where every town and every village, every school and every train,
every street and every house, are clean and sanitary,

An India where every citizen has access to good health care,

An India where every village has 24x7 electricity,

An India where every city is vibrant and livable,

An India where girls are educated and empowered,

An India where every boy and every girl is skilled and ready for productive
employment,

An India where agriculture, industry and services provide well-paying jobs to
all who need them,

An India where farmers know the nature of their soil, have the best inputs and
reach global levels of productivity,

An India where enterprises, large and small, have access to capital and credit,

An India where start-ups and other businesses provide innovative solutions,

An India which is at the forefront of a global digital economy,

An India which leads the world in clean energy,

An India where every citizen has basic social security and a pension in old
age,

An India where citizens trust Government and are trusted by Government.

And above all, a transformed India where all citizens have the opportunity to
reach their full potential.